Product Review — QuickBooks 1099 E-File Service

Posted on February 1, 2015

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The beginning of the year marks that dreaded time of year for many small businesses when 1099-MISC forms have to be sent.  These forms are sent to vendors and contractors from whom services were purchased in the prior year.  This year they are supposed to be mailed to recipients by tomorrow, February 2, 2015.   Although there are a variety of 1099 forms in addition to the 1099-MISC, for most businesses the 1099-MISC is the only 1099 form that they are required to file.  This post is focused only on the 1099-MISC form.

QuickBooks has always offered the ability to print 1099s directly from the program if you know how to properly configure it.  The biggest challenge for most businesses is tracking down EINs or social security numbers in January for new vendors who were added during the prior year.   Every year we vow in January to do a better job getting tax ID #s from new vendors this year, and every year we promptly forget the promise and have to scramble to collect them just before the due date.

This year, one of my clients exceeded the IRS’s limit of 250 forms for paper forms and was forced to submit forms to the IRS electronically.   In response, we assisted them in using the built-in electronic filing service that QuickBooks offers.  As a result of that experience, we also used this service for our much less extensive 1099 filing (<10 forms) at Stratton Ltd.

Based on these two experiences, we can recommend the QuickBooks product to others, but with one caveat described below.

How it works:

QuickBooks contains a 1099 Wizard that takes the user through configuring QuickBooks for 1099s–for example, identifying which vendors will need to receive a 1099 and entering their tax ID #s.  Once the user has completed the wizard and all the 1099 data is entered, QuickBooks presents a screen in which the user has the option to print the 1099s themselves or sign up to use the E-File Service.  Here is the screen:

QB E File Screen Shot

 

 
To use the E-File Service, the user first either creates an Intuit account or logs into an existing Intuit account.  You would already have an account if you bought QuickBooks directly from Intuit and downloaded the program, or if you are using another Intuit app with QuickBooks already.  Next you “sync” your file with their 1099 service.  Finally, you enter your payment info, do a final review and edit your 1099 data as necessary, and then you create the actual 1099s.  QuickBooks provides you a pdf file from which you print the recipients’ copies of the 1099s on plain paper and mail them to recipients.  The service separately provides you a pdf file that contains the copies you keep for your file.  The final step is to e-file the 1099s with the IRS.  After you complete that step, the program provides a confirmation that the filing has been made.  Print your confirmation page, file it with the file copies of the 1099s, and you’re done.

Here are the pros and a con….

Pros:

1) Cost.  QuickBooks charges $14.99 for the first three forms, plus $3.99 per form for the fourth through twentieth form, and then all forms above twenty are free.  So my client with over 250 forms paid only $82.82.  This is less than the cost of the blank pre-printed 1099-MISC forms that would have been required.

2) Plain Paper Forms.   The service prints your 1099s on plain paper, so printer issues with aligning forms to print properly in the boxes and with paper jams are eliminated.

3) Eliminate the IRS Form 1096.   If you send paper copies of 1099s to the IRS, you have to complete and include a form 1096.  This is a transmittal form that contains a description of the number of forms filed and the total dollars included on all the 1099s filed.  By e-filing, you are not required to prepare and send the 1096.

Con:

Support.  Given QuickBooks’ well-deserved reputation for inconsistent phone support, if you have a problem, expect some frustration solving it.  In our case, we had some problems with our larger client that were unique to the fact that there were multiple companies and QuickBooks versions on the PC we were using.  We spent way too much time on the phone getting the problems fixed.   However, for the small filing we did at Stratton Ltd, the service worked flawlessly.  I expect most users will have this experience.

In summary, so long as you don’t run into problems that require a call to support, we recommend the QuickBooks E-File Service as a cost effective way for small businesses to meet their 1099-MISC filing requirements.

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